BofA Private Bank Study of Wealthy Americans Finds Generational Divide in Investing, Giving and Preserving Wealth

Rhea-AI Summary

The 2024 Bank of America Private Bank Study reveals significant generational differences in investment strategies among high-net-worth individuals. Millennials and Gen Z allocate three times more of their portfolios to alternative investments compared to older generations.

While 72% of younger investors (ages 21-43) believe traditional stocks and bonds can't yield above-average returns, only 28% of older investors share this view. Younger investors hold 47% of their portfolios in stocks and bonds, compared to 74% for older investors, and allocate 17% to alternatives versus 5% for older generations.

Cryptocurrencies and gold are highly favored by younger investors, with 49% owning cryptocurrencies and 45% owning physical gold. Millennials and Gen Z show keen interest in supporting causes like homelessness and social justice. However, gaps in generational wealth planning persist, with 52% lacking basic estate planning elements.

In the next decade, women are expected to control $30 trillion in U.S. wealth, significantly influencing financial decision-making.

Positive

• Younger investors allocate 17% of their portfolios to alternatives, compared to 5% for older generations.
• 49% of younger investors own cryptocurrencies, indicating strong interest in digital assets.
• Interest in social justice, homelessness, and environmental causes is nearly twice as high among younger donors.
• Over the next decade, $30 trillion in U.S. wealth is expected to be transferred to women, increasing their control over financial decision-making.

Negative

• 52% of wealthy individuals lack the basic elements of an estate plan, including a will and healthcare directive.
• 48% of respondents have not considered hard assets like real estate and collectibles in their estate plans.
• One in five wealthier individuals report strain over inheritance, with 54% of younger respondents experiencing this issue.
• Only 27% of respondents say they understand trusts and their benefits very well.

Millennials and Gen Z Allocate Three Times More of Their Investment Portfolios to Alternative Investments than Older Generations

NEW YORK, June 18, 2024 /PRNewswire/ -- High-net-worth individuals believe U.S. stocks offer the best opportunities for growing assets, but that conviction is less held by younger investors finds the 2024 Bank of America Private Bank Study of Wealthy Americans. Millennials and Gen Z are increasingly looking beyond the traditional stock and bond markets to build their wealth and are driving demand for everything from investment real estate and private equity to digital assets and gold. 

"We're living through a period of great social, economic and technological change alongside the greatest generational transfer of wealth in history," said Katy Knox, president of Bank of America Private Bank. "Our study shows that wealthy Americans are focused on diversification, long-term goals and making a lasting impact with their wealth."   

Younger Investors Driving Demand for Alternative Strategies
Seventy-two percent of younger investors (ages 21-43) believe it is no longer possible to achieve above average investment returns by investing solely in traditional stocks and bonds, compared to only 28% of investors over the age of 44 that hold the same view.

The study found that among younger high-net-worth investors:

• 47% of their portfolios are in stocks and bonds, far lower than investors over the age of 44 (74%).
• 17% of their investment portfolios are allocated to alternatives, compared to 5% allocated by older investors. Most (93%) say they plan to allocate more to alternatives in the next few years.
• Nearly half (49%) own cryptocurrencies and another 38% are interested in owning it. They rank cryptocurrency among the top opportunity areas for growth, second only to real estate investments.
• 45% own physical gold as an asset and another 45% are interested in owning it. Overall, 41% of the wealthy own (18%) or are interested in buying (23%) physical gold.

Passing on Wealth:  Gaps in planning for generational transfer of wealth
Despite the importance placed on sharing and sustaining family money, gaps in planning, communication and guidance could derail these well-intended goals.

• One in five respondents report having experienced strain over an inheritance, including 54% of younger respondents.
• Half (52%) of wealthy Americans do not have the three basic elements of an estate plan, consisting of a will, advanced healthcare directive and durable power of attorney.
• Nearly half (48%) of respondents have not considered hard assets, including real estate, art and collectibles and other tangible assets, in their estate plans.
• 56% of respondents have established a trust; however, only 27% say they understand trusts and their benefits very well.
• 69% of parents of adult children have talked with their children about family wealth plans. They start those conversations only after their children have reached the age of 31, on average.

Giving with Purpose, Collecting with Passion
Giving back is a near-universal trait among the wealthy, inspired mostly by a sense of responsibility (52%) and a desire to make a lasting positive impact (40%). However, where they give and other passions, such as owning art and collectibles, varies greatly by generation.

• 91% of the wealthy are ardent supporters of philanthropy. Younger donors are nearly two times more likely to support homelessness (41%), social justice (33%) and the environment/climate change (32%) compared to older donors (21%, 18% and 17%, respectively).
• 40% of the wealthy overall either own or are interested in an art collection, including 83% of millennials and Gen Z.
• 65% of study respondents, including 94% of those under the age of 44, are interested in collectibles. Millennials and Gen Z are at least two times more likely than older generations to be collectors of watches (46%), wine or spirits (36%), rare or classic cars (32%), sneakers (30%) and antiques (30%).

In addition to influencing the next generation, the "Great Wealth Transfer" will also contribute to women controlling more wealth than ever before, according to Bank of America Institute. Over the next decade, $30 trillion in U.S. wealth is expected to be transferred to women influencing financial decision-making, philanthropic giving and more.

For an in-depth look at insights visit 2024 Bank of America Private Bank Study of Wealthy Americans.

2024 Bank of America Private Bank Study of Wealthy Americans Methodology

Escalent, an independent market research company, conducted an online survey on behalf of Bank of America Private Bank. The survey consisted of 1,007 high-net-worth (HNW) respondents throughout the U.S. Respondents in the study were at least 21 years of age with at least $3 million in investable assets, excluding primary residence. The margin of error is +/- 3, reported at a 95% confidence level. The respondents are a nationally representative sample of the U.S. high-net-worth population and not necessarily clients of Bank of America or its wealth and investment management businesses.

About Bank of America Institute

Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, sustainability, and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from 69 million consumer and small business clients, 57 million verified digital users, $4.1T in total payments in 2023 and $1.27T in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom.  Click here to register for news email alerts.

Reporters may contact:

Julia Ehrenfeld, Bank of America     
Phone: 1.646.855.3267
Julia.Ehrenfeld@bofa.com 

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SOURCE Bank of America Corporation

FAQ

What did the 2024 Bank of America Private Bank Study find about young investors?

The study found that Millennials and Gen Z allocate more to alternative investments and are less confident in traditional stocks and bonds compared to older generations.

How do younger investors allocate their portfolios compared to older investors?

Younger investors allocate 17% of their portfolios to alternatives, while older generations allocate only 5%.

What are younger high-net-worth individuals investing in?

Younger investors are investing in cryptocurrencies, private equity, real estate, and physical gold.

What percentage of younger investors own cryptocurrencies?

49% of younger investors own cryptocurrencies.

What gaps exist in generational wealth planning?

52% of wealthy Americans lack basic estate planning elements, and 48% haven't considered hard assets in their plans.

What impact will the Great Wealth Transfer have on women?

Over the next decade, $30 trillion in U.S. wealth is expected to be transferred to women, increasing their influence over financial decision-making.